California’s Proposed SAF Tax Credit Really Will Raise Gas and Diesel Prices While Delivering Small Carbon Reductions

In late February, my co-authors and I blogged about a new tax credit for sustainable aviation fuel (SAF) that California Governor Gavin Newsom has proposed as a trailer bill to the 2026-27 state budget. It would allow refineries and other companies that pay diesel taxes in California to reduce their tax bill if they also produce sustainable aviation fuel.

We argued that the proposed tax credit would reduce road funding, raise gasoline and diesel prices, and deliver small and expensive carbon emissions reductions. The Sustainable Aviation Advisory Council posted a response to our article entitled “Six Faulty Assumptions and Facts about California’s Proposed SAF Credit”.

Here, I explain that the council’s points are incorrect. I quote each of their six claims about our assumptions and follow each one with my response.